Let's make life better through Humanity, Technology and Sustainability.

In India, long before anyone knew the word corona virus, Quarterly GDP was falling. Markets started the month of February 2020 on a negative note after the Union Budget 2020-21 announcements failed to meet investor expectations. Markets continued the downtrend for the second consecutive month in March 2020.GDP was going down but markets were making new peaks. I wrote a blog almost a year back (3rd june 2019 to be precise) predicting correction in stock market. You can read it by clicking here. Whenever stock markets start trading in high valuation zone, market start finding reasons for correction. Coronavirus is one such scape goat.

Corona virus threat coupled with falling oil price created panic in world market. Finally, markets are corrected 20-25% and reached in bear phase. WHO declared COVID-19 as Pandemic.

No one knows for how long this bear phase will continue. However, market is offering huge discount and it is the right time to start shopping in stock market for quality stocks. Presently, (12.03.2020) Nifty 50 is trading at PE ratio 21.83. It is good time to enter the stock market and buy quality stocks with 3 to 5 years investment perspective. Defensive investers must start their SIP’s in mutual funds.

Does Corona Virus will have all negative impact on Economy?

Countries across the world, including India and the US, are imposing travel restrictions, fuelling fears of a global recession. There are expectations that the loss in trade, tourism, and fresh investment can drag GDP growth.

Aviation, tourism and those manufacturing companies heavily dependent on Chinese spare parts will face worst impact due to COVID-19 Pandemic.

However, there will be some companies who will make huge profits. Companies making surgical instruments, masks, sanitizers, pathology labs, Hospitals, Pharma companies, local spare parts manufacturing companies and news channels will see top line growth.

More people die because of Flu and extream climate conditions then the no. of death occured due to noval corona virus also known as COVID-19. However, for COVID-19 there is no drug or treatment available till date which is the prime reason for panic across the globe. If it will take more than a month from now in finding cure, it will have a huge impact on world economy. In a global village, no country can survive in isolation.

Like this:

This year Budget-2020 is presented on Saturday. Normally Saturday and Sunday are off days for Indian stock market. However, due to Budget presentation, share market was open and there was a steep fall in BSE Sensex of around 1000 points.

Unfortunately, all mutual funds decided to remain closed on Saturday as usual because as per their offer documents Saturday and Sunday are “Non business days” and NAV is not calculated on these days.

Mutual fund investors face huge loss due to this. All Mutual funds investors were unable to invest or redeem their money on Saturday. Suppose some person wanted to invest money on Saturday in mutual fund then he has to invest it only on monday when again market will be open. On Monday market was recovered and thus he missed the opportunity to buy low.

Logically, when share market is open, Mutual funds should be open too. This is not the first time when budget was presented on an off day. In 2005 also Budget was presented on Saturday. Mutual funds must think about it and in the interest of investors, all mutual funds houses and online discount brokers like Zerodha and Groww must remain open on such holidays. Even if they have to make some changes in offer documents, they must do it.

Millions of Indian Mutual Funds investors are feeling cheated and lose money on third of February 2020. When stock market is open, every investor must have access to invest not just those who directly invest in stocks. I request all Mutual Fund investors to raise their concerns to fund houses to avoid it in future.

Like this:

BJP led Indian Government should stop implementing RSS agenda and start listening to economic experts. Presently PM Modi is busy in pleasing few super rich industrialist and businessman. These Businessmen gives highest donation to BJP during election. However, Businessmen are not economic experts; they are expert of running a company profitably. They have their own hidden agenda to generate more profit for their company by requesting government to make favourable policies. They are focussed on their business not on Indian overall economic growth.

Government should trust more on Bureaucrat and let experts do their jobs. If PM or FM need advice they should listen to Nobel Laureate. Even if opposition parties especially our Ex-PM Manmohan Singh, who changed the course of Indian economy in 1991 and again in his tenure as a PM, wants to give advice, Government must be open to listen to his advice. Unfortunately, presently, this is not the case.

A good Government must have a long term vision. Government should focus on new ways to generate revenue rather than selling profit making PSU’s.Reducing corporate tax was a short term solution for long term problem of economic slowdown. Disinvestment of profit making PSU’s is another short term solution. To make a balanced budget, Govt. should focus on Agriculture and farmers.

A realistic Budget is far better than a popular but unrealistic budget. This is because every surprise brings panic in market. Though I am not a economic expert but as much as I learned about economy as an investor I find more and more economic experts suggesting Government to increase spending on infrastructure project which will generate employment and demand in market rather controlling fiscal deficit. Also, reduction in personal taxes are important, which will give purchasing power to people.

An extra ordinary problem needs extraordinary solutions. India is facing huge economic slowdown. GDP is at its lowest level in last 6 years. Everyone has very high expectations from Government, because this Budget will decide our direction in this new decade.

Definition:

Fiscal Deficit: The difference between total Income (revenue) and total expenditure of the government is termed as fiscal deficit. It is represented in terms of percentage of national GDP.

GDP= Gross Domestic product: It is a measure of the value of economic activity within a country. It comprise of market values of all final goods and services produced in an economy during a period of time.

Like this:

Broadly speaking, there are two kinds of Investors –Aggressive and Defensive. Aggressive investors are those who are willing to take more risk for more profit, thereby putting their investment at higher risk. Whereas defensive investors are those who are more interested in avoiding any losses on their initial investment. They want to play safe. They are happy with minimum returns.

Investment and gambling are two different things. In investment, you take a calculated risk and do the proper research before investing. In gambling, you leave everything on your luck and wild guess.

So, even if you are an aggressive investor, do proper research before trying to make more profit. Do not just invest blindly on someone advice. Instead of making higher profit you may end up losing all your money. Do not invest on someone’s recommendations or past performance of any share or mutual fund. Past performance does not guaranty future returns.

We all know one universal principle of investing: More risk, more profit. Conversely, it also means that chances of making profit decreases as profit increases. If chances of making profit decrease too much, it becomes gambling rather than investing. In gambling most of people lose money. Similarly, investing with high risk can make you lose your whole money.

Seldom people told stories of peoples making lot of money in very short span of time from stock market. However, there are many more cases where people lost all of their hard earned money. Thus, do not let other’s success stories blind your eyes.

What is the purpose of investing? To make money, right? If instead of making money, you start losing money, there is no benefit of investing. Better, keep your money safe in bank account or in liquid funds. So, by default everyone must be a defensive investor.

If you have some extra money which you do not need for several years, you can invest it in stock market as an aggressive invertor. For high risk and high return, invest in small cap funds or small cap stocks.

For retail investors and first time investors, defensive investing is the best. Diversify your portfolio and invest in different sectors and different schemes. Be happy with 10 to 15% annual profit on your investment in stock market and mutual funds because no other scheme will give you better returns. It has been observed that in long term (five to seven years), stock market gives good return. As per your risk appetite, mix your investment in debt and equity.

Like this:

After waiting almost one year, finally today I reached to my
second milestone of 200 followers. Cheers!!!

Thanks to all who appreciated, criticized and motivated me
and my blogs. Somewhere I read that 70% bloggers quit in their first year. I am
lucky to find some wonderful people who liked my blogs and gave me reason to
keep writing. Though I know, neither me nor my writing are perfect, still you
guys supported me. It is the time to thanks you all who read my blogs and most
importantly I would like to thanks those who commented on my blogs.

A big THANKS to everyone!

Share this:

Like this:

There are many broken marriages because of the physical or mental incompatibility. People marry without knowing each other. They take the oath of living together forever as soul mate and in very first night they come to know this relation will not last any longer because of incompatibility! Still you try to patch up things but within a year or so you feel like enough is enough. You can’t spoil your whole life for your oath. You deserve a better life and with a heavy heart you broke up and move on.

In Indian sub-continent, this is a tremendous problem. We can call such unions as blind marriage where boy and girl didn’t see and talk to each other until they get married. Families of bride and groom make all the arrangements and they feel quite proud about it and believe it is morally correct. We can minimize such incidents of illogical practice resulting in divorce, if we let boy and girl to meet and understand each other completely before marriage. Let them spent some time together before they marry each other.

We do see some successful blind marriages, but in most of the cases such marriages succeed only because of wife does all the sacrifices to save her marriage. Her parents always tell her that if she disobeys her husband she is wrong, and there is no space in their home for her if she came back after fighting with her husband. Can there be anything more ridicules’ than this? Society preaches such behaviour as morality!

Time had come when we should raise our voice against such stupidity so-called morals. In small cities and villages you can still find such practice. I do not understand logic of it in a society which allows co-education . But when it comes to marriage it becomes somewhat objectionable if bride and groom want to see or talk to each other before marriage, the whole family will have problem. As blind dates are dengerous, so are blind marriages which can ruin your entire life.

Like this:

Population
growth is putting enormous pressure on natural resources. Underground water,
which was available in abundance few decades ago is depleting very fast. Rich
peoples always find a short-term solution to avoid such problems without
thinking about long-term effect. First, they come up with above ground pumps to
store municipal water in overhead tanks and to use it 24 hours uninterrupted.
Due to which poor peoples were unable to get water. Later, when there was not
enough water in municipal water line, they start using submersible pumps.
However, no one think about its long-term effect on water table and its permanent
solution.

Water level
is going down very rapidly. In many villages, hand pumps are not working
anymore. You have to bore as deep as 200m depth to find sweet water, such
boring cost more than one lakh Indian Rupees. Poor’s and even lower middle
class peoples cannot afford such huge amount of money.

In Neem
village in Mathura and Dori nagar in Aligarh, potable water crisis is
increasing day by day. Poor farmers and villagers are suffering daily. Daily
women have to walk for 2 km for sweet water. Submersible pumps with less than
200m boring are no longer working. If such scenario will continue for long
time, even plants will start dying causing double havoc for human being.

What is the
solution of this problem?

Rainwater
harvesting, reducing wastage of clean drinking water and using treated water
can be the solution of this grave problem. Without Government and NGO
involvement, this will not be possible. However, Government is giving slogans.
No concrete action until date.

What is
Rainwater Harvesting?

Rainwater
Harvesting refers to the practice of collecting rainwater
from a roof or other surfaces and to use this water for different purposes.
Water collected is typically used as a non-potable source for uses such
as toilet flushing, urinals, and irrigation. If the water is treated it
can also be used as potable water for drinking, dishwashing or bathing.

Share this:

Like this:

Early trends of 2019 election vote counting are showing clear majority for BJP. Exit polls were right this time. Congress paid the price of its Ego and family politics. They could have made alliances with several regional parties like in UP, they could have joined the Mahagathbandhan. But their overconfidence and ego came in between. They bring Priyanka Gandhi at last moment as if she is a magician and can turn things upside down.

Post-election it is easier to criticise but Congress need to understand root cause of their successive shameful failures. Root cause is that Congress do not have suitable Prime ministerial candidate. Just few months ago Congress won elections in three states because RaGa was not fighting for CM from there. Even today, when Ra Ga has improved himself and can face media independently his “Pappu” image is not leaving him. No one has courage to take Rahul Gandhi name when someone ask question-who will be next PM if not Modi?

Mr. Modi is a Hero for powerless peoples. He is a match maker for business tycoons. He has amazing art of adaptation. He keeps his mission above himself. There is no limit that he cannot cross and there is no trick that he cannot use to achieve his mission.

We can continue to blame EVM hacking for election results;
however, it is quite clear that India has changed considerably in last one decade.
Pseudo secularism is haunting Congress. They let RSS to grow exponentially. Now when RSS has poisoned millions of minds
towards Hindu Rashtra and have accumulated lot of resources, it is very
difficult for any other party to win in elections.

Congress desperately needs a better face. Someone like Shashi Tharoor will be a great choice. Rahul Gandhi must accept his defeat and must give chance to another leader to come up as a PM candidate in 2024 elections if that election ever happened!

On other hand, Mr. Modi is looking more humbled and talking more sensibly about 130 Crore Indians after getting unimaginable victory yet another time. I hope Modi-2 will be far better than Modi-1 and India will prosper and progress in coming years as expected by more than a billion Indians.

Above two methods are used by most of new investors. If you do not have big amount of money in your hand, you must opt for SIP where you can start monthly investment as low as Rs.500. whereas if you already have money at your disposal, you can invest as lump sum. In lump sum investment you will start getting profit/loss on whole amount from day one. Whereas in SIP, as your initial investment will be very small, thus, you will gain very small or insignificant return till you accumulate big amount after several months.

Talking about advantage of SIP, SIP average
out the risk of share market as you keep investing regularly.

Both SIP and lump sum has their own advantages. Is there any method by which you can take advantage of both the world?

Answer is yes, and this is the reason why I
am writing this blog. This method is
called STP-Systematic transfer plan. Suppose you have a lump-sum amount and you
want to reduce risk by investing through SIP. In this case STP is best
solution.

First you choose two funds from same
company. Invest your full amount in first fund which has zero exit loads. Using
fixed monthly withdrawal through STP
option you can invest in second fund as SIP. In this way, you will be able to
earn return on both the mutual funds.

Share this:

Like this:

Indian stock market is as sentimental as Indians themselves are. Even a small negative news can cause huge panic in market. Big players and well-informed investors exit at high price immediately and buy shares at low price later. Whereas, small investors who want to make one time investment and become rich in short span of time mostly suffer losses. One very important fact about share market is that, it is a zero sum game. Your loss is someone else’s profit. Those who buy shares based on speculations mostly lose money.

Presently, any passive investment does not yield more than 10% profit in India. Property rates are going down, rental income is between 5 to 8% maximum and interest rate on FD are between to 7 to 8%. However, share market is booming from last 10 years. Share market can give you higher profit or loss.

To minimize risk and to gain more than 10% return, Mutual funds are good investment in long term. They restrict your losses within a narrow band. For low risk and low return of 8% to 12%, you can invest in mix funds known as balanced funds (debt +equity). If you are willing to take moderate risk, and want better returns (if market does not crash abruptly), opt for large and midcap or Multi-cap equity funds. Small cap equity funds are associated with high risk and high return. It is better to avoid pure small cap fund.

If you want to avoid high expense ratio, always buy direct mutual funds. Regular funds always have around 1% higher expense ratio, which can cost you huge amount of money in long term. In addition, direct Index funds are even better having expense ratio around 0.5% or even lesser.

Important terms used in Mutual fund market.

NAV: NAV stands for net asset value. It is the value of one unit of Mutual fund. Higher NAV does not mean over price of units like in stock market. It means Mutual fund performance is good and it is more famous with investors so they are investing more money.

AUM: asset under management. It is the total amount of money managed under particular scheme.

Expense Ratio: It is nothing but fund management charges. Lesser is better.

S.I.P.: Systematic investment plan. It refers to monthly investment of small amount of money in any Mutual fund. You can invest even Rs500 per month in some funds. In this case, your SIP will be Rs500.

Lump sum: One time investment.

If you do not have big amount of money to invest, then SIP is the best way to start investing in mutual fund as it average out your risk and profit. Do not save money to invest one time. Start SIP as early in your life as possible. Read my previous blog to understand benefit of starting early by clicking here.

Like this:

As we start earning, most of us do not have long term financial goals due to which we spent almost whole monthly income on trivial things such as shopping, outing, movies, expensive accessories and parting with friends and family. Since we have no financial liabilities at that age, we are not interested in saving and investing. Even our elders do not motivate us for investing; only few fortunate people may differ! Some of us start saving though for short term goals like marriage, honeymoon, car or bike etc. But no one think about investing at the age of 21 to 25 when we start earning.

Unfortunately, most of us do not understand power of compounding. If you will understand power of compounding you will definitely start investing early. Amount of investment is secondary; time is primary for magic of compounding to take place. If you invest today instead of starting investing after 15 years, your return will be much higher after 25 years . Below table shows an example to prove above statement. There are two persons- Tom and Jack. Tom starts investing at the age of 22 and invested Rs1000 for 25 years till he reached age of 47 years. Jack started investing Rs2500 monthly at the age of 37 and he also invested till the age of 47. Both invested Rs.300,000 but for different duration. Now let us see returns of both persons at the age of 47.

Interest=8 % pa

Years

Tom age 22

Jack age 37

1

12000

30000

2

24960.0

62400

3

38956.8

97392

4

54073.3

135183

5

70399.2

175998

6

88031.1

220078

7

107073.6

267684

8

127639.5

319099

9

149850.7

374627

10

173838.7

434597

11

199745.8

12

227725.5

13

257943.6

14

290579.0

15

325825.4

16

363891.4

17

405002.7

18

449402.9

19

497355.2

20

549143.6

21

605075.1

22

665481.1

23

730719.5

24

801177.1

25

877271.3

Even though both invested same total amount, Tom return is almost double of Jack return, even though Jack monthly investment was 2.5 times lesser thne that of Tom monthly investment.

This means, by increasing duration of investment, even with smaller monthly investment you can earn better returns. This is the power of compounding.

Start systematic monthly investment plan (SIP) as early as you earn. How much amount you invest is not important. There are mutual funds and PPF account where you can invest even Rs500 per month, which means Rs.17 per day. Every person who is earning can save and invest this small amount of money and increase it with time. This will help him/her to achieve financial stability and freedom before reaching age of 50 years. After that you will no longer need to work for you necessities. You will have a secondary income to take care of your necessities; you will work for your own joy and passion. By investing Rs5000 per month, you can save Rs68,00,000 in 30 years if we consider mere 8% profit compounded annually.

There are many equity mutual funds which can give you around 15% profit too. This will increase your wealth faster. However, Equity mutual funds are subject to share market risk. For safer option, you can opt for debt mutual funds, FD’s, PPF account, liquid funds etc.